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What’s the best length for your term deposit?


Putting your money away for a set term has its advantages – especially when you know how long you want to keep it locked up.

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  • Finance
  • Read Time: 5 mins

When it comes to saving money, there are many available options, each with its own set of benefits and limitations.

Among those options, term deposits stand out as a popular choice for people with both short-term and long-term savings goals.

The big question many savers face is determining the best length for a term deposit. This decision can be influenced by the saver’s financial goals and risk tolerance and the comparative advantages of term deposits over traditional savings accounts.

Term length

The maturity period of your term deposit can range from a few months to several years. Term deposits with a shorter term typically offer lower interest rates but provide greater flexibility and access to your funds.

This is handy for people who know when they’ll need their money and those who hope to take advantage of fluctuating interest rates by frequently reinvesting their funds. (Of course, there is no guarantee that the rate will be better when it comes time to reinvest.)

Term deposits with a longer term usually offer higher interest rates to savers looking to lock in their funds for an extended period.

This can greatly enhance the growth of your savings, including through compound interest if you reinvest the interest earned. However, it comes at the cost of reduced liquidity, because accessing your funds before the maturity date usually incurs penalties.

National Seniors Term Deposit


With no fees and flexible terms, the National Seniors Term Deposit allows you to lock in a competitive interest rate that’s protected for your fixed term.  

You can earn competitive interest rates up to 5.00% per annum. 

National Seniors members can earn a special rate of 4.95% for 5 months, 4.95% for 6 months, or 5.00% for 7 months on maturity for term deposits over $5,000.

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Savings goals

Your savings goals play a crucial role in determining the ideal length for your term deposit.

Short-term goals, such as saving for a holiday or a significant purchase within the next year, are better suited to short-term term deposits.

For long-term financial objectives, such as saving for a home deposit, building a retirement nest egg, or paying for a young child’s future education, longer-term term deposits are generally more beneficial.

The higher interest rates associated with these deposits can substantially increase your savings over time, making it easier to reach your financial targets.

Term deposit versus savings account

For short-term savings goals, the choice between a term deposit and a traditional savings account often boils down to the balance between interest rates and liquidity.

While savings accounts offer variable interest rates and immediate access to funds, term deposits usually provide higher, fixed interest rates, guaranteeing the rate for the term’s duration.

This makes term deposits an attractive option for short-term savers who can afford to set aside their funds for the full term.

For longer-term savings goals, the advantages of a term deposit are even more pronounced.

The higher interest rates not only offer a greater return on your investment but also provide the security of a fixed rate, protecting your savings from the fluctuations of the market.

In comparison, savings accounts, with their variable interest rates, may not offer the same level of growth or security over the long term. For savers with a clear long-term objective and no immediate need for liquidity, term deposits are a prudent choice.

National Seniors Australia Ltd ABN 89 050 523 003 arranges deposits as an authorised representative (AR 282736) of Auswide Bank Ltd, ABN 40 087 652 060 Australian Financial Services Licence 239686. We do not provide any advice based on any consideration of your objectives, financial situation or needs. A target market determination can be obtained at auswidebank.com.au/tmd. Before making a decision to invest, please consider the Terms and Conditions. If you make a deposit, we will receive a commission from Auswide Bank. For more information about our relationship with Auswide Bank please read the Financial Services Guide contained in the Terms and Conditions.*This account is protected by the Australian Government deposit guarantee. Up to $250,000 of deposits in ‘protected accounts’ held by an entity with Auswide Bank are covered under the Financial Claims Scheme. Information on the Financial Claims Scheme is available at www.fcs.gov.au.

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